Pharma Policy: Right diagnosis, doubtful prescription

 Joe C Mathew   New Delhi     Last Updated: August 21, 2017  | 16:39 IST
Pharma Policy: Right diagnosis, doubtful prescription

The draft pharmaceutical policy 2017, floated by the ministry of chemicals and fertilizers for stakeholder opinion recently, has rightly diagnosed the problems that are plaguing Indian drug industry.

It has identified the slowdown in the growth (from 14.36 per cent in 2010-11 to 8.68 per cent in 2014-15) of domestic pharmaceutical market. It has highlighted Indian industry's increasing dependence on imported raw materials - active pharmaceutical ingredients and key starting materials - to manufacture finished dosage formulations.

It has flagged the quality concerns raised against indigenously manufactured medicines. Specific issues like delay in new drug approvals, unethical marketing practices and acquisition of Indian drug companies by foreign entities have also been looked at.

Coming close on the heels of a National Health Policy that was announced early this year, the draft pharma policy makes an attempt to streamline the system of manufacturing and marketing of medicines to achieve the primary goals of the health policy - universal health coverage and delivery of quality health care services to all at affordable costs.

In short, the policy attempts to meet two broad laudable objectives of promoting Indian industry and promoting better health programmes for Indian citizens.

Lets us look at the likely impact of the proposed policy on domestic drug makers first.
If finalised in its current form, the policy can lead to a major shakeup in Indian pharmaceutical industry as it proposes to end the practice of contract manufacturing and loan licensing. Bulk of India's drug production happens through such arrangements, especially from the hill and special category states that used to be excise free zones until the new indirect tax regime GST kicked in.

It will also act as a clampdown on marketing companies that outsource drugs in the brand and strength it wants and target specific geographies, mostly small towns and villages of India. The stringent WHO Good Manufacturing Practices and Good Laboratory Practices requirements will turn the compliance heat on small scale drug units. The companies that thrive on formulation manufacturing by using low cost imported raw materials are also to find the situation unfriendly as the government wants to link the price it will allow companies to charge to the percentage of indigenous raw material usage. In short, the number of pharmaceutical companies from the current size of over 10,000 could come down sharply.

The large drug manufacturers, who derive bulk of their revenues from export markets will be the least affected. The timelines for drug approvals suggested in the draft policy, and the proposal to involve industry representatives and civil society groups in the price fixing exercise of the National Pharmaceutical Pricing Authority may result in their ease of doing business.
The assertion that patented medicines will not be subjected to price control should come as an encouragement to the foreign multinational drug firms.

Will it churn help Indian consumer?

The policy proposes a one-drug-one-brand system, by disallowing companies from launching different brands of same medicine at different prices. Noting that some 2500 pharmaceutical salts are sold in over 60,000 brand names in different prices, one company, one drug, one brand one price system is being proposed. The generic push - where only combination medicines will be allowed to use brand names - is another move that is aimed at rationalising domestic drug market. If the proposal gets implemented, and drug companies find this to be a commercially viable proposition, it can bring down the prices of medicines.

What needs to be seen is the extent of proposals that will be part of the final policy.  One thing is certain. The government's favourite slogans "Make in India" and "Ease of Doing Business", will make no sense to the industry unless the new policy helps them sustain and improve their business prospects.

With no public sector manufacturing capability left, government is unlikely to summarily reject industry proposals.

 

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